MBA Exe: Consultancy Project Dr.

Muhammad Ashraf

Electro-Light Drink: A Product Launching Case

SuperSoda is a top-three beverage producer in the United States and has approached You for help in designing a
product-launch strategy.

Description of situation

As an integrated beverage company, SuperSoda leads its own brand design, marketing, and sales efforts. In
addition, the company owns the entire beverage supply chain, including production of concentrates, bottling and
packaging, and distribution to retail outlets. SuperSoda has a considerable number of brands across carbonated
and non-carbonated drinks, five large bottling plants throughout the country, and distribution agreements with
most major retailers.

SuperSoda is evaluating the launch of a new product, a flavored sports drink called Electro-Light. Sports drinks
are usually designed to replenish both energy (sugars) and electrolytes (salts) in the body. However, Electro-
Light has been formulated to focus more on the replenishment of electrolytes and has reduced sugar content
compared to most other sports drinks. The company expects this new beverage to capitalize on the recent trend
away from sugar-rich products.

SuperSoda’s vice president of marketing has asked You to help analyze the major factors surrounding the
launch of Electro-Light and its own internal capabilities to support the effort.

Question 1:

What key factors should SuperSoda consider in deciding whether or not to launch Electro-Light?

Question 2:

After reviewing the key factors SuperSoda should consider in deciding whether to launch Electro-Light, your
team wants to understand the beverage market and consumer preferences to gauge potential success of Electro-
Light.

Your team has gathered the following information on the US sports-drink market. The information shows an
estimate for the share of electrolyte drinks, as well as the current share for the two main electrolyte
products: CoolSweat and RecoverPlus.
MBA Exe: Consultancy Project Dr. Muhammad Ashraf

Based on the target price and up-front fixed costs, what share of the electrolyte drink market would Electro-
Light need to capture in order to break even? Here is some additional information for you to consider as you
form your response:

 Electro-Light would launch in a 16-ounce presentation (one-eighth of a gallon) with a price of $2 to

retailers.
 In order to launch Electro-Light, SuperSoda would need to incur $40 million as total fixed costs,
including marketing expenses as well as increased costs across the production and distribution network.
 The vice president of operations estimates that each bottle would cost $1.90 to produce and deliver in
the newly established process.

Question 3:

SuperSoda executives believe that the company's position as a top three beverage company gives them strategic
strengths toward achieving the desired market share. However, they ask the team to outline what would be
needed to achieve the target of 12.5 percent share of the electrolyte-drinks market. What would SuperSoda need
to do to gain the required market share for Electro-Light following its launch?

Question 4:

To help SuperSoda determine how best to launch the new Electro-Light product, the team conducted a
consumer-research study. The following information shows results from the study. What can you conclude from
this regarding how the new Electro-Light product should be launched?
 MBA Exe: Consultancy Project Dr. Muhammad Ashraf

Question 1:

Consumers. Who drinks sports drinks? Are there specific market segments to address?

Cost/price. Is the sports drinks market more profitable than those markets for SuperSoda’scurrent
products? Is it possible to profitably sell (at a price set by the market and internal production
costs) Electro-Light? Given the fixed costs involved, what would be the break-even point for Electro-
Light?

Competitors. Which products will Electro-Light compete with? Which companies are key players and
how will they react?

A very good answer might also include multiple additional key factors SuperSoda should
consider. For example:

Capabilities and capacity. Are the required marketing and sales capabilities available within
SuperSoda? Does the product require specialized production, packaging, or distribution? Is it possible
to accommodate Electro-Light in the current production and distribution facilities? What impact does
geography have on the plant selection?

Channels. What is the ideal distribution channel for this product? Are current retail outlets willing to
add Electro-Light to their product catalog?

Question 2:

Electro-Light would need to capture a 12.5 percent market share of electrolyte drinks in order to break
even. Therefore, Electro-Light would need to be the number-two product in the market:

1. Electro-Light would need to sell 400 million units in order to break even:
 Variable profit per unit = $2.00 – $1.90 = $0.10
 Break even units = Total fixed costs/Variable profit per unit = $40 million/$0.10 per unit =
400 million units

2. Electro-Light would need to capture a 12.5 percent market share:

 Electrolyte drinks market = 5% x 8,000 million gallons = 400 million gallons
 Electro-Light sales in millions of gallons = 400 million units/8 units per gallon = 50 million
gallons
 Market share = 50 million gallons/400 million gallons = 12.5%

Question 3:

Match with consumer preferences. Ensure product image, attributes, and quality fulfill the needs of
all consumers or niche segment, reaching desired market share. Ensure target price is consistent with
other products in the market and the consumer’s expectations
MBA Exe: Consultancy Project Dr. Muhammad Ashraf

Strong branding/marketing. Create a successful introductory marketing campaign, including

advertising, pricing, and bundling promotions. Leverage top-three producer status and limited market
fragmentation in order to position Electro-Light brand within top three in the market segment.
Anticipate response from competitors (for example, advertising, pricing, distribution agreements).
Ensure product positioning does not cannibalize on other, more profitable SuperSoda products. (Note:
in marketing, the decreased demand for an existing product that occurs when its vendor releases a
new or similar product is called “cannibalization.” It is not important for you to use this business
terminology.)

Operational capabilities. Ensure access to preferred distribution channels. Ensure sales-force

capabilities to sell the new product. Ensure production ramp-up that allows response to increased
demand.

Question 4:

Branding should emphasize “healthy natural” identity. “Leisure drink” identity is dominated
by CoolSweat product, “energy replenishing” by RecoverPlus, and “healthy natural” fragmented in
other products. There is a clear niche within the “healthy natural” identity, with top-two brands
currently occupying only 30 percent of share of mind. “Healthy natural” branding should also
determine thinking around the sales channels (for example, sales through health and nutrition outlets,
health aisles at supermarkets).

Distribution differs from current outlets and needs new agreements/research. Major shifts
compared to current distribution model required in “supermarkets,” “other,” and “convenience stores.”
Agreements with major retail players may accommodate product introduction,
with SuperSoda managing mix across channels. “Other” channels need further research, since they are
a major component of the sports-drink segment.

Marketing message to emphasize identity and availability. Marketing campaign should be built
around the currently unaddressed market need for “healthy natural” drink in order to connect with
customers in that segment. Given required changes in distribution channels, Electro-Light messaging
should clarify new distribution strategy.